Shall I use VAT exemption?

My business is not VAT registered
If your annual turnover is below the VAT registration limit of the country where your store is based, then most likely it is not VAT registered.

This means that you do not charge VAT on your sales regardless of where your customers come from.

My business is VAT registered
If your business is VAT registered, you have to charge VAT to some customers and not to others. You also need to include your VAT registration number on your invoices and receipts to make them valid.

When should I charge or exempt VAT?
The next table represents the basic rules:

Tax settings

In order to charge VAT to some customers and not to others, all product prices in your store should be set without VAT.

Your customers must have an accounts and default address. We need this info in order apply EU tax rules and set your customers as tax extempt if applicable.

Visit the Settings → Taxes page in the administration of your Shopify store and make sure that the All taxes are included in my product prices checkbox is unchecked.

Visit the Paidify's settings page, enter the valid VAT registration number and make sure Exempt VAT checkbox is checked.

Exempt VAT checkbox is visible only if you entered valid VAT reginstration number.

You can find more info about showing VAT prices of your product pages here.

VAT exemption

To allow your customers to use VAT exmption before they actually checkout, you need to add some code to the storefront theme you're using.

customers/account.liquid

You can find theme file here

<p>
  <input type="hidden" id="Email" value="{{customer.email}}"/>
  <label for="paidify_customer_vat">VAT registration number</label>
  <input type="text" id="paidify_customer_vat" value="{{customer.metafields.paidify.vat}}" />
  <input type="submit" name="update_vat" id="paidify_update_vat_btn" value="Update VAT" style="margin-top: 10px;" />
</p>
<p id="paidify_vat_errors"></p>
<p>
  Please add <strong>default address</strong>. We need it to set you as tax exempt according to EU rules.
</p>

Good place to insert that code is right after customer address details.

cart-template.liquid

You can find theme file here

<div class="vat-reg-number" style="margin: 20px 0 20px 0;">
  {% if customer.metafields.paidify.vat == nil %}
      <label for="Email" >Customer Email</label>
      <input type="text" id="Email" />
      <label for="vat_reg_no_cart">VAT Registration Number</label>
      <input placeholder="NL123456789B01" type="text" id="vat_reg_no_cart" name="attributes[vat_reg_number]"/>
      <div id="paidify_vat_check_errors">
        <span></span>
      </div>
  {% else %}
    <div>
      <input type="hidden" id="Email" value="{{customer.email}}"/>
      <input type="hidden" id="vat_reg_no_cart" name="attributes[vat_reg_number]" value="{{customer.metafields.paidify.vat}}"/>
      <span>
        VAT Registration Number:
      </span>
      <span>
        {{customer.metafields.paidify.vat}}
      </span>
    </div>
  {% endif %}
  <input type="hidden" id="paidify_vat_checking_result"/>
</div>

Good place to insert that code right before checkout button.

customers/register.liquid

You can find theme file here

<label for="paidify_vat_reg_no_register">VAT Registration Number</label>
<input id="paidify_vat_reg_no_register" type="text" name="customer[note][VAT Registration Number]" />
<p id="paidify_vat_errors"></p>

Good place to insert that code right after the LastName field.